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“College Logo/Name”

A PROJECT REPORT

ON

“MARKET ACCEPTANCE OF UNIT LINKED INSURANCE


PLANS IN COMPARISON TO TRADITIONAL PLANS”
OF
“Company Logo”

AT “Name of the Location”

Submitted By:
“Name of the PT”
“Roll No of PT”
“Specialization”

Under the supervision of

PROJECT GUIDE FACULTY GUIDE


Mr. XYZ (Name) Prof. XYZ (Name)
Designation Name of the College
LAT(ABC)

1
ACKNOWLEDGEMENT

This report bears the imprint of many people. Right from the experienced staff of LAT to
the staff of “Name of the College”, without whose support and guidance I would have
not got the unique opportunity to successfully complete my internship in this esteemed
organization.

I take this opportunity to express my deep gratitude to all the employees of LAT, ABC.
Also I am indebted for the rich guidance, knowledge and suggestions provided by Mr.
Yogesh Kumar Tiwari (Branch Manager) my industry mentor and Mr. Abhishek
Agarwal (Credit Life manager), who took sincere efforts and illustrated the functioning
of the entire sales and marketing process in LAT with their vast knowledge in the field.

I would also like to extend my gratitude and special thanks to Ms. Nidhi (Branch
Trainer), Mr. Siddharth (Assistant Manager), and Mr. MC Tyagi (Business Associate), at
LAT insurance company, ABC for providing adequate corporate knowledge and assisting
me in completing the training successfully.

I am deeply gratified to Prof. R.K. Krishnan (Project Guide) for his earnest
coordination and valuable efforts. He constantly encouraged me right from the selection
of the project to final preparation of my project. He has been a constant source of
knowledge, information, help and motivation for me through his depth knowledge and
reflections.

Last but not the least, I am hugely indebted to all the faculty members of my institute, all
my family members and friends for their sincere advice and cooperation which helped
me to accomplish my assignments in the most efficient and effective manner.

“PT Name”

2
TABLE OF CONTENTS

Contents Page No.

1. Executive summary……………………………………………………4

2. Literature Review……………………………………………………...5

3. Introduction……………...…………………………………………….6

4. Company Profile…...………………………………………………….9

5. Objectives of the Project……………………………………………..11

6. Research Methodology……………………………………………….12

7. Network of LAT…………………………………………...................15

8. Product Portfolio...……………………………………………………17

9. Introduction to ULIPs……………………………………………..…18

10. Traditional Insurance Plans…………………………………………21

11. Comparison of ULIP to Traditional Plans………………………….22

12. Quantitative Analysis………………………………………………...24

13. Findings……………………………………………………………….38

14. Recommendations…………………………………………………....41

15. Conclusion…………………………………………………………….42

16. Appendix (Questionnaire)……………………………………………44

17. Bibliography…………………………………………………………..47

3
EXECUTIVE SUMMARY

The project has been undertaken to understand the insurance needs of the customers of
ABC city and to ascertain that which type of insurance plan is more suitable for their
needs, and also to determine the market acceptability of Unit Linked Plans and
Traditional Plans.

The study was also undertaken to find out that which one are the more preferred plans of
LAT. The project also highlights the various other factors of the customers relating to
their age, income-group, insurance needs, investment selection, etcetera and the products
taken by them.

Therefore for the purpose of this project, designing a questionnaire and getting direct
responses from the people was thought to be the most appropriate method as it gives a
more clear understanding about the current scenario of customer choices. As the project
reached towards its completion, it was found out that the unit linked products are much
more preferred in the market in comparison to traditional plans.

4
LITERATURE REVIEW

For the purpose of completing the project effectively and in the most efficient manner
and to get the knowledge about the market acceptance of unit linked and traditional
insurance, the researcher has undergone through a lot of material on both type of
insurances and has used the following literature review.

An article from the Resource Book written by Mr.T.S.Ramakrishna Rao has been
referred.

Another article from the Resource Book written by Mr. S.S. Shrinivas and Mr. Anand
was also referred to study the investor’s need.

An article from the Outlook Money by Mr. Sunil Dhawan published in December 2007
on Unit Linked insurance products was referred.

An article from The Economic Times published in March 2008 has been referred.

5
INTRODUCTION

Every individual is exposed to innumerable risks connected with life, business and his
vocation. Since insurance is a means to avoid the consequences of risks, the scope
extends to many areas. Life Insurance being a major area, offer covers to protect the
individual against the risk of “dying too early or living too long” and to provide security
against the present day complexities of life and rapidly changing social systems.

Risk of Dying too Early

• Each individual has got a certain financial value attached to his life in the form of
his earning potential.
• If he dies at a young age or during the time when he had an earning potential his
family suffers a financial loss in the form of loss of his potential earnings.
• A lot of his obligations towards the family remain unfulfilled due to his sudden
demise.
• This is called the Risk of Dying too early and it can be protected against by taking
life insurance coverage.

Risk of Living too long

• Every individual plans his life & his sources of income to the best of his ability
taking into account his life expectancy.
• Sometimes, despite the best of planning the individual is not able to provide for
contingencies such as serious / chronic / prolonged illness for himself or his
spouse which results in all the planning going haywire.
• If a person survives beyond his expected age his planned sources of income could
diminish or become inadequate due to a variety of reasons.
• This could result in his not having money at the time when he needs it most and is
not in a position to go and earn the same.
• We call this the risk of living too long and protect against the same by taking
whole life insurance policies where withdrawals are possible as & when required
or by taking Pension policies or annuities.

6
INSURANCE NEEDS AT DIFFERENT STAGES OF LIFE
Insurance needs change as per the life, from starting to work to enjoying one’s golden
years and all the stages in between. Each one of these stages may pose a different
insurance need/cover for a person.

Fig. 1: A Diagram depicting different stages in a Human Life.

Stage 1: Young and Single


An important stage, where one lays down the foundation of a successful life ahead. One
should take advantage of the time and power of compounding to ensure that one can
build up his dreams. So one should start saving early.

Stage 2: Just Married


Marriage brings about a significant change. New dreams and new opportunities also
bring in additional responsibilities. While both the spouses look forward to a happy and
secure life, it is equally important to ensure that eventualities don’t come in the way of
shaping their dreams.
Stage 3: Proud Parents

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Once a person has children, his need for life insurance is even more. He needs to protect
his family from an untoward incident. He should ensure his protection umbrella takes into
account the future cost of securing the child’s dream by having enough life insurance.

Stage 4: Planning for Retirement


While one is busy climbing the ladder of success today, it is important for him to take
time and plan for the life after retirement. Having an early start for retirement planning
can make a significant difference to the savings.

Unfortunately, Life Insurance is probably the least favorite thing to plan for. And, as a
result, adequate planning is often put off until it's too late. Although it may sound simple,
there are many things to consider. There are many ways to protect one’s family with life
insurance.

Suppose for example a person dies at an early age, Life insurance can provide a surviving
spouse, children, and other dependents with the funds necessary to maintain their
standards of living, can help repay debt, and can fund education tuition costs. The amount
one needs depends on one’s situation.

In this way, Life Insurance provides two-fold advantage, the first in the form of small
savings and the other in the form of security in the event of premature death. Thus, a life
insurance is a combination of savings as well as security. By taking a suitable life
insurance policy one feels a sense of security. He is assured that insurance company will
come to the rescue of his family in case of his pre-mature death. If there is no claim and
the policy matures for payment, the savings so made will be sufficient to meet the old age
expenses. In India, Life insurance Corporation transacts the life insurance business.
Personal accident and sickness insurance cover the risk of death due to accident and also
pay compensation for self-injury and sickness.

COMPANY PROFILE

8
LAT

LAT Insurance Company Limited (LAT) is a joint venture company, formed by the LAT
Group and Group Inc. A (GIA). LAT combines the LAT Group’s pre-eminent leadership
position in India and GIA’s global presence as the world’s leading international insurance
and financial services organization. The LAT Group holds 74 per cent stake in the
insurance venture with GIA holding the balance 26 percent. LAT provides insurance
solutions to individuals and corporates. LAT Insurance Company was licensed to operate
in India on February 12, 2001 and started operations on April 1, 2001.

Its member companies write a wide range of commercial, personal and life insurance
products through a variety of distribution channels in approximately 130 countries and
jurisdictions throughout the world. GIA’s global businesses also include financial
services and asset management, including aircraft leasing, financial products, trading and
market making, consumer finance, institutional, retail and direct investment fund asset
management, real estate investment management, and retirement savings products.

AREAS OF BUSINESS

LAT Insurance products include a broad array of life insurance coverage to both
individuals and groups. For groups, the company has life products whereas for
individuals, it has term products, endowment products as well as money-back products.
For groups and individuals, various types of add-ons and options are available to give
consumers flexibility and choice. The company has also designed specific products for
the financially challenged and underprivileged.

9
ABOUT LAT GROUP

The LAT Group is one of India's largest, oldest and most respected business
conglomerates, with revenues in 2006-07 of $28.8 billion (Rs.129,994 crore), the
equivalent of about 3.2 per cent of the country's GDP, and a market capitalization of
$72.2 billion as on December 6, 2007. LAT Group has had a long association with India's
insurance sector having been the largest insurance company in India prior to the
nationalization of insurance. The Late Sir Das LAT, was the founder Chairman of XYZ.,
a group company incorporated way back in 1919.

LAT companies together employ some 289,500 people. The LAT Group has operations
in more than 85 countries across six continents, and its companies export products and
services to 80 countries.

10
OBJECTIVES OF THE PROJECT

The objective of the project undertaken was to study the insurance market of ABC city,
and find out the preference of the buyers towards the Unit Linked and Traditional Plans.
The study includes responses from the general public as well as policyholders of LAT
and also of other companies.

• To study the market acceptance of ULIPs and Traditional Plans.

• To examine the various reasons which influence the buyer’s decision while
choosing an insurance plan.

• To analyze the preference of the buyers based on their insurance needs, age,
gender, income-level and various other factors.

• To study the level of acceptance of Unit Linked Plans and Traditional Plans of
LAT in ABC, and the reasons associated with it.

• To find out which are the unit linked plans and traditional plans of LAT
Insurance, which sell most in the ABC and RAC market.

• To study the functioning and working of the Branch Office of LAT Insurance,
ABC.

11
RESEARCH METHODOLOGY

The topic of the project is “Market Acceptance of Unit Linked Plans in comparison to
Traditional Plans”. The study was carried out with the objective to get an insight as to
which of the plans out of Unit Linked Insurance plans and Traditional plans is more
acceptable in the market of ABC city.

DATA COLLECTION TECHNIQUES

1. PRIMARY RESEARCH

Primary research included working with people and observing them. As the study was
done with the Branch office of LAT Insurance (ABC), the observations were concerned
with people working there, their work practices and ways of doing work.

The method adopted for this survey was Exploratory Research since the main aim was to
gain an insight in to the acceptance of the consumers for Unit Linked Products and
Traditional Products, and what are the factors that lead to their decision while choosing a
plan. A decision was taken to use the questionnaire method. The questionnaire was
thought to be the most suitable because it allows structured, meaningful and uniform
interaction with the respondent.
The following steps enumerate the various stages of this project.

Step1. Designing the questionnaire

The first step in the research process was the formation of questionnaire, keeping in view
the need for uniformity and specificity of information. A structured, non-disguised
questionnaire was drafted keeping in mind that it will cover the objectives of the project.
The questionnaire is drafted for the public, which includes customers of LAT as well as
of other insurance companies and also the general public.

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Step2. Deciding the sample size

The sample size for the number of persons to be surveyed was decided to be 100 so that
sufficient information and variability can be obtained. As far as the companies are
concerned, the number of insurance companies does not matter for the purpose of this
project. The place of study is ABC city only.

Step3. Collection of data

The questionnaires were directly filled by the respondents, or a communication was made
through telephone or personal interview. Some of the questionnaires were mailed to the
respondents.

Step4. Classification and tabulation of data

The data obtained through the questionnaire was then fed in to the computer and
tabulated. The data was obtained through objective questions and was put in graphical
form. This was done to facilitate analysis about the various aspects such as awareness
level, major factors influencing people while buying an insurance cover etc.

Step5. Analysis and Findings

The data, as it was put in the form of graphs was easier to analyze. Interpretations were
done and major inferences were drawn.

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2. SECONDARY RESEARCH

The secondary source of information included the data provided by the company. This
data was of utmost importance for understanding the problem. However desk research
was also carried out to enhance theoretical knowledge. Desk research included consulting
books and Internet searching.

3. DATA ANALYSIS

The data provided and collected was processed, classified and fitted into charts and tables
to make findings more meaningful. On the basis of these data, relevant conclusions and
inferences were drawn and the results were interpreted objectively.

IN BRIEF

CENTRE : ABC

RESEARCH TYPE : EXPLORATORY

RESEARCH TECHNIQUE : QUALITATIVE &


QUANTITATIVE

RESEARCH APPROACH : SURVEY

TOOL USED : QUESTIONNAIRE

DATA SOURCE : PRIMARY &


SECONDARY

SAMPLE SIZE : 100

SAMPLING PROCEDURE : STRATIFIED


RANDOM SAMPLING

14
THE NETWORK OF LAT

DIRECT CHANNEL

The direct channel operates under the Sales Managers and with a team of Insurance
Consultants or agents. The business is directly procured from the market and there are no
intermediaries involved as there is under the Alternate Channel.

ALTERNATE CHANNELS

Corporate Agents, Brokers and Franchisees


The strategic alliances group at LAT GIA focuses on strengthening the business through
Group Insurance and Corporate Agency activities.
• A constantly growing nationwide network of Corporate Agents, Brokers and
Franchisees and also through High Network Individuals.
• A decentralized, dedicated team of professionals helps recruit, develop and
support corporate agents, brokers and franchisees.
• Intermediaries actively working with LAT, countrywide include-Franchisees
1924; Corporate Agents 402, Brokers 132.
• At ABC there are; Franchisees -15, HNIs - 4 and Corporate Agents- 8.

Bancassurance
Bancassurance is one of LAT GIA’s key business strategies and forms the core focus
area. They have tie-ups with several leading national and private sector banks.
• H Bank
• C Bank
• A Bank
• GIA Housing Finance Ltd.
• Ever expanding reach through tie-ups with large regional banks.
Products customized to suit specific needs of banks and their customers.

15
A CHART DEPICTING THE NETWORK OF LAT

LAT Insurance

Agency Channels Bancassurance Group and Alternate


Channels

Branches H Bank Group Employee


Benefit

Satellite A Bank
Corporate Agencies

GIA Housing
Franchisees
Finance Ltd.

Brokers
Other Leading
Co-operative
Banks

16
UNIT LINKED INSURANCE PRODUCTS

In today’s market, we can see a flood of investors, who are desirous of multiplying their
wealth with minimal investment risk. In response to the market needs and with a view to
capture the emerging risk bearing investor market segment, life insurers are offering a
range of ULI products, which have a blend of risk cover and wealth maximization. Thus,
emerged the USP for Unit Linked Insurance products- efficient utilization of capital with
maximum transparency.

WHAT ARE UNIT LINKED PLANS?

ULI products have built-in judicious mix of providing insurance protection against
death/disablement and also a provision for creating long-term savings. These are
structured differently compared to the traditional ‘with-profit’ policies and also with
reference to pure investment options of a mutual fund.

In ULI products, an insurer invests the premium paid by the client in diverse funds after
charging the premium accounts for expenses towards life protection, administration,
distribution and fund management, with a view to optimize returns based on the fund
objective. The sum total of investments thus made, divided against the number of
investors in a fund are called as ‘Units’.

The value of the units is determined by the market value of all the investments made by
the fund divided by the number of units. The value of the fund depends on the unit price,
which in turn is determined by the market value of the underlying assets. Thus,
Fund Value = Unit Price * Number of Units.

Insurers, today offer a wide range of funds such as Growth Fund, Balanced Fund,
Secured Fund, Bond Fund, etc, to enable investors to choose the appropriate fund based
on his need and investment objective.

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It is at this juncture that an investor needs to understand the nuances of a ULI product
offered by various insurers in areas of adequate disclosure and transparency in its fund
management activities. One should not get carried away by the sweet coating made in
various offer documents. It is here that this guidance note makes an effort to provide an
investor the awareness as to what aspects are to be looked into before making an
investment decision in ULI products.

THE INVESTMENT REQUIREMENTS OF AN INVESTOR

An investor’s primary dilemma is why and how much insurance he needs and what
should be his investment? Here comes in handy the services of professional investment
advisors (popularly known as Agents), who with prior knowledge of various products and
experience, help/guide an investor to a large extent to overcome this dilemma.

An investor’s need/investment objectives can be broadly grouped as follows:

1. Large investment in house/real estate property.


2. Children’s Higher Education Expenses.
3. Children’s Marriage Expenses.
4. Health Expenses.
5. Old Age Comfort Living.
6. General Financial/Life Protection, etc.

Based on these needs/objectives and the guidance he receives, an investor decides his
priorities. Since ULIP of various Insurers cater to these needs, we confine our selection to
ULI products.

18
DISTINCT FEATURES OF UNIT LINKED INSURANCE PRODUCTS

A prudent investor’s minimum expectation is to minimize risk and maximize returns.


Today customers are aware that the era of guaranteed returns are things of the past. The
fall in interest rates in the recent past, globalization, cutthroat competition, market
orientation, etc., are all indications enough to understand what lies ahead in the
investment climate. What unit-linked products offer is a long-term investment option
where returns are expected to be far more real and are not compromising in the life cover
protection.

In the guaranteed returns regime, the guaranteed component was met by paying lower/no
returns to those who did not have any guaranteed contracts on their products. This was
unjust. Today, unit linked products offer greater value to the customers. Despite being
exposed to market risks, customers get value for their money/investment by a judicious
mix of plans/exit options. Also, it is a high probability that the returns that these ULIP
offer are bound to be relatively higher compared to what similar traditional plans offer,
since ‘risk bearing’ brings ‘rewards’.

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TRADITIONAL LIFE INSURANCE PRODUCTS

There are two varieties of insurance products available to an investor-‘with profit’ and
‘without profit’.

‘With Profit’ life insurance products indicate investment gains (profits) and are
distributed to policyholders in the form of ‘bonus’ announced every year .For ‘with
profits’ products, the insurance company credits the premium to a common pool called
the ‘life fund’, after setting aside funds for the risk premium on life insurance and
management expenses.

Every year, the insurer calculates the amounts to be paid towards death and maturity
claims against its earnings from premium and investment returns. The surplus is arrived
after providing for various reserves and also based on actuarial valuation of life fund. The
net surplus amount in the fund is credited to policyholders’ accounts in the form of
‘bonuses’.

In contrast, ’without profits’ life insurance products do not participate in the valuation
exercise of the insurer and are not eligible for any benefit in the form of bonus. Only the
final consideration amount, as stated in the initial contractual agreement, is paid on the
happening of an event or at the end of the contractual term.

Various forms of traditional life insurance covers offered by insurers can be broadly
classified into:
a. Whole Life Insurance Policy
b. Endowment Assurance (risk + savings)
c. Term Insurance (pure risk coverage)

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TRADITIONAL INSURANCE VS. UNIT LINKED INSURANCE

Traditional Insurance Unit Linked Insurance


Choice of ‘with profit’ or ‘without Choice of investment in various funds under
profit’ products unit-linked plans.

Assured benefit after the end of the Benefit based on capital market
contract. performance.
Liquidity in the form of surrender value Liquidity in the form of surrender value
available only after three years of available after year one of policy
policy commencement. commencement with or without a levy.

Option to raise loan available No option to raise loan


Guaranteed addition offered, as per Returns directly proportional to the capital
contract. market
Returns based on contractual Returns based on funds underlying assets
terms/actuarial valuation/insurance NAV as on maturity/withdrawal date.
companies experience

21
WHY UNIT LINKED PLANS ARE POPULAR IN THE MARKET?

The reason why ULI products are popular is because the investor need not closely follow
the market, monitor his funds on day-to-day basis, or switch between the plethoras of
alternatives on offer. The investor’s money is in safe hands of experts. It ensures that the
investor’s hard earned money grows without the bother of overseeing his investments.

The growing demand for ULIPs is on account of the boom on the bourses and the
northward journey of the sensex. There has been a lot of compulsive selling of unit-
linked policies by insurance advisors. Often, ULIPs are compared with mutual fund
schemes. This fact cannot be denied that they are akin to mutual funds. A perceptible
mass migration is seen today from the traditional endowment policies offered by insurers
to unit linked plans. The reason is not far to seek-reaping the dividends by way of two-in-
one benefits that these new-generation offerings promise: Insurance cover and market-
linked returns.

Internationally, till the 1960s life insurance policies were sold as traditional or non-linked
policies. ULIP came into prominence in the mid 1960s and became exceedingly popular
in Western Europe and the US. In England, ULIPs share of the life insurance market pool
increased from 28% in the mid 1970s to 40% by the turn of the century; while in the US,
the market share of variable ULIP policies increased to 48% during this period. This
impressive growth was primarily against the backdrop of the increasing popularity of
equity as an investment medium and the trend of reducing bonuses on traditional life
insurance policies. The widespread popularity of ULIP is also attributed to its
transparency and flexibility.

22
QUANTITATIVE ANALYSIS

The project report is prepared to study that which type of insurance plan out of Unit
Linked Plans and Traditional Plans is more widely accepted by the people in the city of
ABC. The study includes responses from the policyholders of LAT Insurance Co. Ltd,
ABC and also from those who are not the policyholders of LAT Insurance Plans. The
data collected from the respondents by the way of direct responses through questionnaire,
has been tabulated and shown with the help of graphical charts. The number of
respondents for the purpose of the study is hundred out of which, 52 are the customers of
LAT, 36 are the customers of other insurance companies and the rest 12 are people not
having any insurance policy. The Analysis includes various Graphs and Charts:

Graph 1: Age wise representation of the Respondents.


Graph 2: Gender wise representation of the Respondents.
Graph 3: Occupation wise representation of the Respondents.
Graph 4: Division on the Basis of Marital Status of the Respondents.
Graph 5: Income wise representation of the Respondents.
Graph 6: Representation as per the number of dependents.
Graph 7: Division on the basis of having an Insurance policy or not.
Graph 8: Proportion of Other means of Savings in addition to Insurance.
Graph 9: Division on the basis Of Type of Insurance plan taken.
Graph 10: Division on the basis of their awareness about LAT.
Graph 11: Division of sources of awareness about LAT.
Graph 12: Percentage Breakup of Respondents surveyed.
Graph 13: Per. Breakup of Ulip and traditional plans of the customers of LAT GIA.
Graph 14: Ratings given by the respondents on different features of the company.
Graph 15: Division on the basis of their Insurance needs.
Graph 16: Division on the basis of amount to be spent on Insurance.

1. AGE-WISE REPRESENTATION OF RESPONDENTS

23
The maximum number of respondents lied in the age group of 30-40 yrs of age,
which was 38% of the total sample.

Category Percentage Of Respondents


Under 20 yrs 4%
20-30 28%
30-40 38%
40-50 22%
50-60 8%
Over 60 yrs 0

Division as per Age (in yrs)

38%
40%
35%
28%
30%
25% 22%

20%
15%
8%
Age
10%
4%
5% 0
0%
Under 20 20-30 30-40 40-50 50-60 Over 60
yrs yrs

Graph No. 1
(Source: Survey)

2. GENDER-WISE REPRESENTATION OF RESPONDENTS

24
The number of males in the respondents constituted 84%, and the number of females
constituted 16% of the total number of respondents.

Category Percentage of
Respondents
Male 84

Female 16

Division as per Gender

Female
16%

Male
Female

Male
84%

Graph No. 2
(Source: Survey)

3. OCCUPATION-WISE REPRESENTATION OF RESPONDENTS

25
Maximum number of respondents, which was 36%, belonged to the category of people
involved in Business.

Category Percentage of Respondents


Business 36%
Salaried 34%
Profession 10%
Housewife 8%
Student 8%
Retired 4%
Others 0%

Division as per Occupation

40%
35%
Business
30% Salaried
25% Profession
20% Housewife
15% Student
10% Retired
5% Others
0%

Graph No. 3
(Source: Survey)

4. PROPORTION OF RESPONDENTS AS PER THEIR MARITAL


STATUS.

26
A large number of respondents who buy insurance plans are married and they made up to
72% of the total sample surveyed.

Category Percentage of Respondents


Married 72%
Single 28%

Division as per Marital Status

Single
28%

Married
Single
Married
72%

Graph No. 4

(Source: Survey)

5. INCOME-WISE REPRESENTATION OF RESPONDENTS

27
A major portion of the respondents were in the income group of Urban Higher Middle,
which constituted 52%, followed by the income group of Urban Middle of 32%.

Category Percentage of Respondents


Rural Poor 0%
Urban Poor 0%
Urban lower 0%
Urban Middle 32%
Urban Higher middle 52%
Urban Rich 16%

Division as per Incom e Group

Urban Rich,
16%
Urban Middle,
32%
Urban Middle
Urban Higher Middle
Urban Rich

Urban Higher
Middle, 52%

Graph No. 5
(Source: Survey)

28
6. REPRESENTATION AS PER THE NO. OF DEPENDENTS OF
RESPONDENTS.

The number of dependents on the respondents was highest in the range of 3 to 5


dependents.

Family Profile of Respondents as per their No. of


Dependents

70%
60%
60%
50%
40%
30% 24%
20% 16%

10%
0%
0%
Less Than 3 From 3 - 5 More Than 5 None
Graph No. 6

(Source: Survey)

7. DIVISION OF RESPONDENTS BASED ON, WHETHER THEY HAVE


AN INSURANCE POLICY OR NOT.

All the hundred respondents whom I questioned for my research work, the level of
insured people was found to be ninety two percent i.e. 88 respondents were insured either
with LAT or with some other company.

Category Percentage of Respondents

Insured 88

Not Insured 12

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8. DIVISION OF THE POLICYHOLDERS ON THE BASIS OF THE
TYPE OF INSURANCE PLAN THEY HAVE TAKEN. (ULIP OR
TRADITIONAL)

A huge number of the respondents who had taken insurance policies, there was 64%
of unit linked insurance products out of those and the rest were traditional products.

Divisionof policyholdera on the basis of insurance plan

70 64
60
50 Ulip
Endowment
40
Money Back
30
Whole Life
20 16
12 Term
8
10
0
0

Graph No. 7

Ratio of Ulip to Traditional Plans

Traditional
36% Ulip
Ulip Traditional
64%

Graph No. 8
(Source: Survey)

30
9. PROPORTION OF THE OTHER MEANS OF SAVINGS OF THE
RESPONDENTS IN ADDITION TO INSURANCE.

The respondents in the questionnaire could mark more than one option of their other
means of savings apart from insurance. Therefore the results shown in the graph is more
than the actual number of respondents i.e. hundred.

Category No. Of Respondents


Fixed Deposits 20
Savings Bank a/c 22
Provident Fund 14
Equity 8
Mutual Funds 24
Any Other 12

Ratio of other means of Savings of the respondents

Any Other, 12
Fixed Deposits, 20
Fixed Deposits
Savings Bank
Mutual Funds , 24 Provident Fund
Equity
Savings Bank, 22
Mutual Funds
Equity, 8
Any Other
Provident Fund, 14

(Source: Survey)
Graph No. 9
10. DIVISION OF THE RESPONDENTS ON THE BASIS OF THEIR
AWARENESS ABOUT LAT INSURANCE CO.

31
All the hundred respondents whom I questioned for my research work, the awareness
about LAT was found to be hundred percent i.e. all the respondents were well informed
about the presence of LAT GIAin the market, whether they are policyholders of LAT
GIAor not.

11. DIVISION OF SOURCES OF AWARENESS OF LAT TO THE


RESPONDENTS.

The respondents in the questionnaire could mark more than one option of their source of
information about LAT. Therefore the results shown in the graph is more than the actual
number of respondents i.e. hundred.

C o m p an y Aw aren ess fro m V ario u s S o u rces

Com pany Com pany Representative


Hoardings , 17 Repres entative, 22 F riend/Relative
Internet, 4
News paper/m agaz ine
Telem edia, 16 Telem edia
Friend/Relative, 18
Internet
News paper/m agazi
ne, 24 Hoardings

Graph No. 10

(Source: Survey)

12. PERCENTAGE BREAK-UP OF RESPONDENTS SURVEYED.

32
The total number of respondents insured with LAT GIA was 52 out of hundred, which
was approximately half of the total sample size. Out of the rest 48, 36 were insured with
other insurance companies and 12 did not have any type of insurance.

Category Percentage of
Respondents
Insured with LAT GIA 52%

Insured with Other 36%


Companies
Not Insured 12%

Respondents Insured with LAT

Not Insured,
12%

LAT
Other LAT, 52% Other Companies
Companies, Not Insured
36%

Graph No. 11

(Source: Survey)

33
13. PERCENTAGE BREAK-UP OF ULIP AND TRADITIONAL PLANS
OF RESPONDENTS WHO ARE POLICYHOLDERS OF LAT.

Percentage Breakup of Plans Of the LAT customers

90% 84%
80%
70%
60%
50%
40% Series 1
30%
20% 10%
10% 4% 2% 0%
0%

rm
t

fe
ip

ck
en

Li
Ul

Te

Ba
m

le
w

ho

ey
do

on
W
En

M
Graph No. 12
(Source: Survey)

14. THE RATING GIVEN BY THE RESPONDENTS ON A SCALE OF 1-


5 ON THE FOLLOWING FEATURES, WITH RESPECT TO THEIR
CURRENT INSURANCE PLAN.

70% 64%
60%

50%

40%
Series1
30% 26%

20%
10%
10%

0%
Product attributes Services Provided Your Satisfaction
Graph No. 13
(Source: Survey)
15. DIVISION OF RESPONDENTS BASED ON THEIR INSURANCE
NEED.

34
The respondents in the questionnaire could mark more than one option for their insurance
need with respect to their current insurance plan. Therefore the results shown in the graph
is more than the actual number of respondents i.e. hundred.

Category No. of Respondents


Security 30
Tax Planning 40
Investment 36
Spouse/Children 10
Expenses 4

45 Tax Planning,
40
40
Investment, 36
35
Security, 30
30
25
20
15 Spouse/Children
, 10
10
Expenses, 4
5
0

Graph No. 14
(Source: Survey)

16. REPRESENTATION OF THE AMOUNT WHICH THE


RESPONDENTS CAN SPARE MONTHLY FOR THEIR INSURANCE
NEED.

35
A large number of respondents selected the range of 500 to 1000 as the amount which
they can spare on insurance monthly, and the rest 56 percent chose the range till Rs. 5000
and there was no one in the range of 5000 to 10000.

Category Percentage of Respondents


500-1000 44%
1000-2500 36%
2500-5000 20%
5000-10000 0%

(all figures are in Rs.)

44%
45%
40% 36%
35%
30%
25% 20%
20%
15%
10%
5% 0%
0%
500-1000 1000-2500 2500-5000 5000-10000
Graph No. 15

(Source: Survey)

FINDINGS OF THE PROJECT

36
As I prepared a questionnaire and established direct contact with the respondents for the
purpose of my study, where the respondents were both the policyholders and non-
policyholders of LAT Insurance, ABC Branch, and as the objective was to study that
which plan is more widely accepted out of unit linked plan and traditional plan in the city
of ABC, I found out that the customers find Unit Linked products a one-stop and hassle
free solution for both their needs of security and money investment. Because by way of
unit linked products they are also investing their money into the market, which was not
available with the traditional products.

The major findings include:

1. One of the major findings of the project includes that 88% of all the
respondents who were questioned for my study were insured either with LAT
or with some other company.

2. 64% of the respondents had taken Unit Linked Plan and the remaining 36%
had taken Traditional plans.

3. 52% of the respondents belonged to the income-group of Urban Higher


Middle Class, and it was observed that these classes of prospects are keener
towards buying Unit Linked Plans because of the growth factor for their
investments.

4. The next biggest income group of the respondents studied belonged to the
Urban Middle Class, these were the customers who had not many investments
to make but also wanted an option so that they can increase their savings
without further buying insurance.

5. While studying the marital status of the respondents, I examined that married
people are more easy to approach and can easily be converted into prospective

37
buyers than people who are single, as my study depicts that 72% of the
respondents were married.

6. As the city of ABC is a growing business market, a major percentage of my


respondents belonged to the business class, which was 36%, followed by
salaried people constituting 34%.

7. When asked about their insurance needs, with the option of stating more than
one need also, 40 respondents chose tax planning, 36 stated investment
followed by 30 who stated security as an insurance need.

8. A major portion of the people i.e. 44% of the respondents can spare Rs.500-
1000 out of their monthly income followed by a 36% between 1000-2500, to
fulfill their insurance needs.

9. It has been observed that a major portion of the respondents buy insurance for
tax planning reason, followed by investment purpose and then they look at it
as a security tool.

10. It was examined that when the respondents were asked to scale the features
viz. Product Attributes, Services Provided and Your Satisfaction, with respect
to their current insurance plan,64% rated maximum points(4-5) to the product
attributes followed by 26% to the satisfaction level(3-4) and 10% for
services(1-2).

38
FINDINGS WITH RESPECT TO LAT (ABC)

1. 52% of the respondents were insured with LAT.

2. Out of the respondents who were insured with LAT, a major portion i.e.,
84% had taken Unit Linked Products and only 16% had taken Traditional
Products.

3. As LAT GIA is one of the major private players in the insurance market of
ABC therefore the awareness about the company amongst the respondents
was found to be 100%.

4. It was observed during the period of training that a Traditional plan called
MLG, sells the most, which comes with Yearly cash dividends, A
guaranteed annual coupon of 5% of the sum assured every year for the rest
of the insured’s term and complete Tax rebate on the Sum Assured .

RECOMMENDATIONS

39
After making personal contacts with the respondents for the survey, studying all the
findings, and analyzing the information which was filled in by the respondents in the
questionnaire, for e.g. their insurance needs, investment choices, preferred insurance
plan, awareness about LAT Insurance etc., based on my opinion, the following
recommendations can be made:

1) It was observed that the respondents allotted more points to the Product Attributes
and comparatively low points to Services Provided and Customer Satisfaction,
therefore greater attention should be paid towards providing the customers with
after-sales service, and continuing assistance for their changing financial needs.

2) The study has given me an insight that some of the customers of Unit Linked
products whom I surveyed have been reporting about the miss-selling practices
adopted by the agents in terms of misrepresentation of facts and other important
provisions of the plans. So the companies should try to work in this regard and
instruct the agents to adopt right and ethical practices.

3) In the Branch sub-Offices and other alternate channels also, which primarily
operate through the franchisees and corporate agents, extensive training should be
provided to them and to their insurance sales representatives, so as to maintain the
brand name and quality.

CONCLUSIONS

The combined effort of the training and the project undertaken has given me a better
understanding of the insurance market of my place of training i.e. ABC, and therefore

40
after the preparation of the project report certain conclusions can be drawn with respect to
the acceptance level of unit linked products and traditional products and also to
understand that to what extent the ULIP and traditional products of LAT GIA are
successful in the market..

The findings can be concluded as follows:

• More of the customers opt for Unit Linked product because it gives the flexibility
to withdraw their money whenever they want after the completion of 3 years of
the policy, like a bank savings account there is an option to the customer that he
can withdraw his money whether partially or completely.

• It can be clearly seen that the age factor of the life proposed does not affect much,
the sum insured or the premium amount under a unit linked plan whereas in a
traditional plan as the age increases the premium goes very high.

• Unit Linked Plans are sold more than the traditional plans also because it is
beneficial for the agents as they get comparatively higher commissions on selling
ULI plans(from 35%-40%),as is the case in LAT GIA.

• ULIPs are also sold more than traditional because it gives a combined benefit of
insurance cover with growth in investments depending upon risk-return profile of
the customers.
• The companies are also pushing their unit linked products because it gives them a
greater solvency margin because of the growth in the investments and they require
less capital.

Therefore I reach to this conclusion that Unit Linked Products of any company are
attracting the customers more than Traditional Products because it gives them insurance
as well as investment options.

41
42
Questionnaire
(A Survey on Market Acceptance of ULIPs by LAT Insurance Company)

1. Name:

3. Age group: (tick only one) 4. Gender:

Under 20 yrs Male


20 – 30 Female
30 – 40
40 – 50
50 – 60
Over 60 yrs

5. Occupation: (tick only one) 6. Marital Status:

Salaried Single
Business Married
Profession
Student
Housewife
Retired

7. Income Group: (tick only one) 8. Number of dependents: (tick only one)

Less than Rs.1500/month Less than 3


Rs.1500 - Rs.5000/month 3-5
Rs.5000 - Rs.15000/month More than 5
Rs.15000 - Rs.30000/month None
More than Rs.30000/month

9. Do you have any insurance policy?

Yes No

43
10. If yes, then what type of plan have you taken? (Please tick all that apply)

Unit Linked Plan


Endowment Plan
Money Back Plan
Whole Life Plan
Term Plan

11. Your other means of savings? (Please tick all that apply)

Fixed Deposits
Savings Bank A/c
Public Provident Fund
Equity
Mutual Fund
Any Other

12. Did you have any prior knowledge of LAT Insurance before this?

Yes No

13. If Yes, then from which source? (Please tick all that apply)

Company Representative
Friend Relative or business associate
Newspaper/Magazine
Tele Media
Internet
Hoardings and Billboards

13. Are you Insured with LAT Insurance Company?

Yes No

14. If yes, then what type of plan have you taken? (Please tick all that apply)

Unit Linked Plan


Endowment Plan

44
Money Back Plan
Whole Life Plan
Term Plan

15. In respect to your current insurance plan, please rate the following on a
scale of 1-5.

FEATURES 1 2 3 4 5
Product attributes
Services provided
Your satisfaction

16. Your Insurance Needs. (Please tick, and rank them according to your preferences.)
Ranks
Your security
Tax Planning
Investment
Pension
Spouse/Children
Expenses-Education, Marriage, Social obligations
Security Against Loans/debts

17. How much in a month do you/can you spare for insurance? (tick only one)

Rs.500 - Rs.1000
Rs.1000 - Rs.2500
Rs.2500 - Rs.5000
Rs.5000 - Rs.10000

(Thank you for yourBIBLIOGRAPHY


kind cooperation in filling up this questionnaire.)

MAGAZINES AND JOURNALS

• IRDA journal

• Business Today

45
• Insurance Times

• The Economic Times

INTERNET WEBSITES

• www.LAT.com

• www.irdaindia.org

• www.outlookmoney.com

• www.bimaonline.com

• Google Search Engine

• Wikipedia

OTHER SOURCES

• Manuals of LAT Insurance

46